NLRB cannot force companies to bargain in face of clear impasse

A Nov. 27, 2012, D.C. Circuit decision weakened the ability of the National Labor Relations Board (NLRB) to force employers to bargain with labor unions, and offered employers a guide to putting the brakes on negotiations, should they so desire.

In Erie Brush & Manufacturing Corp. v. NLRB, Erie was following a 7th Circuit-enforced NLRB order to recognize and negotiate with the Service Employees International Union. The parties agreed to discuss noneconomic issues before economic ones, and it quickly became clear that union security and arbitration of grievances were critical issues on which the parties disagreed.

Over the course of negotiations, Charles Bridgemon, chief negotiator for the union, “repeatedly told [Erie’s chief negotiator Irving M.] Geslewitz that the Union had no room to compromise on those issues,” calling them “make or break on [the] whole contract … Geslewitz was just as adamant, refusing to agree to a contract that contained union security or arbitration provisions,” the decision reads.

Geslewitz would not agree to mediation, saying it was futile because the parties would not compromise on those two issues. Eventually Bridgemon said he had “some give” on arbitration, but union security was still a no-go, and negotiations began to break down.

Erie’s employees then delivered a petition that a large majority of the company’s workers had signed, stating they did not want the union to represent them. Erie withdrew recognition from the union and canceled a scheduled meeting, and, unsurprisingly, the union brought unfair labor practice charges against Erie before the NLRB. An NLRB administrative law judge found that Erie had unlawfully refused to bargain, and that its refusal tainted the employees’ decertification petition.

“The NLRB will often do anything it can to take away the rights of the employees to withdraw,” says Stephen Key, a partner at Key Harrington Barnes. “If there’s any basis to find the employer illegally influenced the employees in circulating those petitions, they will.”

The NLRB ordered Erie to recognize and bargain with the union for at least six more months. Erie appealed to the D.C. Circuit, claiming that the NLRB’s finding of refusal to bargain was not supported by the evidence, which showed the two parties were at an impasse. The D.C. Circuit agreed and vacated the NLRB’s order.

Evidence of Stalemate

The section of the National Labor Relations Act (NLRA) that the NLRB claimed Erie violated prohibits an employer from “refus[ing] to bargain collectively with the representatives of his employees,” but it “does not compel either party to agree to a proposal or require the making of a concession.”

“Some companies will take a position that may seem harsh, or it may seem intractable, but it’s a valid legal position, and oftentimes, if [the company] continues to maintain it, it’s perfectly fine to do that,” says Mark Theodore, a member at Proskauer Rose.

From the beginning, union security and arbitration of grievances were framed as key make-or-break issues for the negotiations, and according to the D.C. Circuit’s opinion, “at no point during the ten month negotiation did either party propose a compromise on union security or arbitration that was acceptable to the other party.” What’s more, both parties explicitly stated they believed they were at an impasse.

The D.C. Circuit agreed with Erie, concluding that “the record evidence not only does not support the [NLRB]’s finding, but uniformly supports Erie’s position.”

The NLRB argued that because Bridgemon suggested mediation (though Geslewitz would not agree to it), and because he was willing to continue discussing the issues, the union’s positions on the key issues must be “gradually softening.”

But the D.C. Circuit was not convinced by this speculation on the part of the NLRB, and quoted its own 2001 case, TruServ Corp. v. NLRB, saying “a vague request by one party for additional meetings, if unaccompanied by an indication of the areas in which that party foresees future concessions, is … insufficient to defeat an impasse where the other party has clearly announced that its position is final.” Once this impasse existed, Erie was relieved of its duty to bargain.

In other words, as the D.C. Circuit put it, “‘You never know’ is no substitute for substantial evidence.”

Navigating Negotiations

In cases such as Erie, evidence is crucial. And for any employer trying to decertify a union, Key says, “the litigation is going to come.” So the best thing for in-house counsel to do is to make sure there is a record of the negotiations.

In Erie, “if they didn’t have the notes, didn’t have a clear timeline, the case could have turned out differently,” Theodore says. “The evidence of an impasse might have been lacking, even if there really was one.”

Often, according to Key, if the company takes the initiative to write up summaries of its meetings with the union, and then sends them to the union, “the unions are too lazy to read it, or edit it, or write their own version of it. So over time, my summaries become the official records of the negotiations.” That record then becomes a powerful tool in front of the NLRB, or in the courtroom.

Key also points out that Erie creates an easily followed road map for any employer whose goal is to decertify a union. As it was in this case, union security is often an issue on which unions are unwilling to budge, according to Key. If employers make themselves similarly intractable, an impasse cannot be far behind.

“It is exceptionally rare for a union to agree to a contract that eliminates the union security clause,” Key says. “At the end of the day, the union is a business. So any other term in the contract, the union would be willing to compromise on, if it means the difference between keeping their dues and losing their dues.”

For employers that want to work with the union, not try to get rid of it, the union security trick can still be a valuable bargaining chip that in-house counsel can offer up in order to get something else they want in the contract.

However, Key says he would have done one thing differently than Erie did in this case. “I will never stop negotiating with the union,” he says. “It just gives the union too much ammunition in the litigation.” Even if the parties have reached an impasse, Key says he would continue negotiations. “I’ll just sit in the room and play Sudoku on my computer while they talk. Just show up.”